Agriculture Reference
In-Depth Information
is available from other countries as well, particularly in the Philippines and
Indonesia, both of which have practiced monopoly control for many years.
Nevertheless, despite mounting evidence, many countries continue to
exercise partial or complete trade control over foodgrain markets in Asia. The
parastatals (or government agencies) control imports of rice and corn in the
Philippines, exports of rice in Vietnam, and imports of wheat in Pakistan and
India. The past two decades have also witnessed vacillating import policies in
both Indonesia and Pakistan. In 1987-88, Pakistan freed wheat imports but
quickly reversed its policy on the grounds that the private sector was importing
substandard wheat. Since then, the government has regularly imported wheat,
involving large subsidies, to supply its public distribution schemes that have
mainly benefited the flourmills and have been reported in local media to have
bred corruption in local food departments. Total subsidies on government ex-
ports and imports were as high as US$190 million in 1995/96, equivalent to
about 68 percent of the total food subsidy bill. Similarly, in Indonesia, rice im-
port restriction was lifted in 1998, but resulted in larger volumes of imports and
consequently increased calls (including from BULOG) for more protection.
The government instituted a temporary ban on imports and allowed only a group
of expressly licensed importers to import rice (USDA-FAS 2004b).
MOVEMENT RESTRICTIONS
. In the Indian subcontinent, the policy of
movement restriction dates back to colonial rule in the early 1940s, when it was
enforced with the dual objectives of preventing hoarding and building stocks
for distribution in major urban centers. The objectives, however, changed when
price support policies were adopted in the 1960s. The idea was to bring the prices
down to the support-price level in surplus areas, so that governments could
procure a sufficient supply for their buffer-stocking and public-distribution op-
erations. In India, researchers often used the term “bottle up,” which became
very popular in the 1970s and 1980s, when the government frequently enforced
movement restrictions in the surplus states.
The policy of restricting foodgrain movements by the private sector is still
partially enforced in India and Indonesia and is frequently enforced in Pakistan
and Vietnam. Pakistan officially lifted movement restrictions in 2001, but in
2004 restriction on wheat movement was being enforced in the state of Punjab
to facilitate public procurement of wheat. Similarly, movement restriction in
India was officially withdrawn in 1977, but was frequently re-introduced until
the 1990s. Even today, India enforces movement restrictions in selected states
on the grounds of preventing smuggling to neighboring countries. In Vietnam,
as of late 1996 rice trade between the north and south resembled that of trade
between two separate countries (Minot and Goletti 2000). Why is this policy so
popular? Presumably, it does aid public procurement. However, it also creates
lucrative rents for an influential group of stakeholders, including food officials,
law enforcement agencies, and politicians. Historically, the policy has never
been conducive to resource allocation and market development. The Indian ex-
